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The implementation of responsible sourcing can take Russian metallurgists up to three years

05 july 2021
On July 5th, the preliminary results of a study on responsible supply chains for Russian metallurgical companies were presented at the event that brought together industrial, civil society, institutional and educational representatives. The research is prepared by the Moscow School of Management SKOLKOVO as a part of the WWF-Russia project "People to Nature" financed by the European Union. The event was hosted by the Association of European Businesses in Russia

Today, environmental issues and the climate agenda play a special role in many international processes. Business in the EU is closely following implementation and application of the European Green Deal. In the future its implications could have an impact on sustainable corporate governance and affect international trade standards and practices, especially in the lack of comparable standards of decarbonization management policy outside the EU.  The  metallurgical industry in Russia could be directly affected by EU and international responsible sourcing standards. 

“The realignment of companies' business processes towards sustainable supply chains seems to be a brand new and a very hot subject to discuss today. Nevertheless, it is as complicated as the problem of climate change, which used to be innovators’ business solely, but today it is being dealt with at the highest level, ”comments Ekaterina Khmeleva, Green Economy and Governance Director at WWF-Russia, “If we want our efforts to save the planet to be successful, we simply must monitor how responsibly goods are produced today in relation to people and nature. This approach is important for the state of the environment and for the economy of our country, it is obvious that Russian industries are forced to change, because otherwise there are risks associated with the loss of markets, primarily European ones”.

The tendency to strengthen the relationship between the economy and environmental protection is also noted by the Association of European Businesses:

“The fact that the Covid-19 pandemic did not put global sustainable development and green agenda on a second plan, clearly demonstrates the importance and urgency of the issue,” noted Ernesto Ferlenghi, AEB Green Initiative Steering Committee Chairman,  “Green technologies” are not just another hype - they are our future. According to the results of a survey conducted by the AEB together with Accenture and other business chambers, 98% of companies in Russia have already identified ESG principles as a priority. It is clear that the economy of the future is shifting to a "greener" path. In addition, cooperation in the area of the green economy has also a huge potential for development and improvement of relations between Russia and the EU”.

Work on the research dedicated to responsible sourcing began in March 2020. The first part describes the situation in the world, and also indicates the emerging trends in the field of producer responsibility at each stage of production. The second one contains conclusions and recommendations based on structural interviews with Russian companies.

Thus it is said, that companies often do not use the “Responsible Supply” term, but apply its principles. Also, the authors of the report note that the definition of “Responsible Supply”, which is not documented, but actually adopted by many companies, is based on the effective management of environmental, social and economic impacts during transportation and throughout the entire life cycle of a product or service. Among the reasons for implementing responsible supply chains companies cite risk identification and management, cost reduction and innovative solutions through partnerships with suppliers.  

Photo from the event
Photo credits: (c) Vyacheslav Zamyslov / WWF-Russia

According to the study, in order to build a responsible supply system, it is important, first of all, to define goals, to rebuild processes within the company, and then proceed to work directly with suppliers. The first stage can take from two to six months, the second - from a year to three years.

Russia's best practices in sustainable supply management demonstrate that the adoption of the world's top standards which could initially be urged by the threat of losing markets or reduced access to capital eventually pay back increasing global competitiveness by reducing costs, optimizing risk profile, and improving company's reputation. In other words, the key lesson from industry leaders is that a systematic approach to the implementation of sustainable development practices in supply chain management makes it possible to turn threats into opportunities, emphasized Alexey Kalinin, Director of the SKOLKOVO Institute for Emerging Markets Studies

The recommendations and conclusions of the study will help metallurgical companies in their work, because there are instructions and precise solutions offered. They can also become an essential tool for assessing environmental risks in the work of consulting companies. NGOs will be able to use the information provided in the study when building a dialogue with companies. Although the research is focused on metals, the approach itself, trends and opportunities affect many industries outside the metallurgical field.

About the People for Nature project

Implemented throughout 2019–2022 by WWF-Russia with the support of the European Union, the People for Nature project aims at engaging the public in environmental protection. The objectives of the project include protecting forests through the prevention of their degradation and illegal exploitation as well as mitigating the environmental impact of the industry by improving the environmental responsibility of businesses and reducing air and water pollution. 

About Association of European Businesses (AEB) 

The Association of European Businesses is the main representative body of foreign investors in Russia. Founded in 1995, the AEB is an independent non-profit organisation of over 500 European and Russian companies. The AEB members are multinational corporations and small and medium-sized enterprises. They all share a commitment to boosting cooperation between the EU and Russia, as well as the desire to improve the investment climate of the Russian Federation.

Norilsk Metallurgical Combine. Photo: (c) WWF Russia